Alan Ruskin
Alan Ruskin
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Up until recently, oil price hikes have offset disinflation. This time around, we're in a situation where inflation is starting to peek its head above the parapet, and policy makers will see it more as an inflation threat. That's problematic -- if they have to start reacting to higher inflation pressures by raising rates, that does slow the economy down.
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My concern is that what's happened here is that inflation is higher than the Fed anticipated. On top of that, the kind of tightening already imposed by the markets, in terms of lower equities and higher bond yields, is setting up weaker growth in 2005.
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The problem with inflation targeting is that it carries with it a risk of less flexibility at times, and that could be problematical. But it also makes policy less of a black box, so policy is likely to be more transparent.
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I think (Fed officials have) found that they're in a lucky position where the inflation numbers are good enough that it's bought them some time (to postpone rate hikes),
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I think the only clear sign that would really tell you that inflation should be rising at this point is, of course, the rise in hourly earnings, ... But at this stage, from what we've seen, corporations seem to be taking it in terms of lower profit margins and, therefore, not necessarily pushing up prices.
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we still don't have any clear signals that inflation is on the way up.
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The data should tend to encourage views that the Fed is correct and that inflation looks to be contained.
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It's certainly a good sign as far as future pipeline inflation is concerned, ... The goods side of the inflation equation is very encouraging.
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We're trying to feel out where's the peak in the Fed funds rate. The data has tended to work in the direction of a weaker dollar.
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To some extent, the bond market's trading pattern has not been resolved of late. This might provide some resolution, and I think it is going to be resolved in terms of higher yields,
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Non-farm payroll numbers of over 300,000 are pretty much consistent with economic growth of about 4 percent, (and) that's way above trend,
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Poor employment trends clearly are weighing on sentiment, ... The (IBD) data is consistent with a meaningful decline in the Michigan survey.
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My gut says the Fed doesn't have too many bullets left to fire, and therefore they have to use them sparingly, and we'll see a (quarter percentage point) cut at the next meeting.
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We have a peculiar situation in which the shoppers seem to feel there is plenty to be cheerful about but the bond market is much more cautious.